Spin-off From Parent Company Gives Rotech More Elbow Room

HEALTH CARE

April 22, 2002|By Greg Groeller, Sentinel Staff Writer

For Steve Linehan, Rotech Healthcare Inc.'s recent emergence from Chapter 11 bankruptcy and its simultaneous spin-off from a national nursing-home chain has meant a freedom that the Orlando-based company had not experienced in nearly five years.

As a subsidiary of Integrated Health Services Inc. since 1997, Rotech -- a distributor of medical respiratory equipment -- spent much of its time working on ways to serve its parent company's nursing homes. As a result, the company's ability to land new customers suffered.

Now that Rotech is a stand-alone entity, all that has changed.

"Nobody is ever going to be whispering in our ear to try to be thinking about synergies with the nursing-home chain,'' said Linehan, Rotech's chief executive officer and president.

When Rotech followed IHS into bankruptcy reorganization in 2000, it was further restrained by rules that restrict companies' ability to grow while operating under court protection.

But Linehan -- who was lured out of retirement to run Rotech shortly after its bankruptcy filing -- decided that the restrictions could prove beneficial. Because it was not allowed to continue its long tradition of growing through acquisitions, Rotech instead focused on internal growth.

The company worked to integrate its hodge-podge of acquired companies and set out to land more customers in need of respiratory equipment to help them breathe.

Rotech began aggressively marketing its products to doctors offices and hospitals. As a result, the number of patients using Rotech's equipment has risen from 75,000 to 106,000 during the past 18 months.

"Everything we do is to get more oxygen into a person's bloodstream,'' Linehan said.

Linehan, whose 30-year career included stints running health-maintenance organizations and doctors groups, said Rotech will focus on customer service as it grows. To that end, the company employs 600 respiratory therapists nationwide who visit patients in their homes to help them properly work their equipment and re-establish normal lives.

"We can measure our progress in real tangible ways,'' Linehan said. "We might get them from bedridden to feeling good enough to cook a meal or get their mail or use the bathroom on their own. We can improve a person's quality of life.''

Rotech -- which has 6,200 employees in 47 states, including 600 in Florida and 300 in Central Florida -- is profitable, with operating margins of about 30 percent, Linehan said.

DOCTORS WIN ON VITAMIN D ISSUE

The company that manages Medicare in Florida has made another concession to doctors who argued that new rules governing medication to treat kidney disease would harm their dialysis patients.

First Coast Service Options Inc., a subsidiary of Jacksonville-based Blue Cross and Blue Shield of Florida Inc., said it will not require new dialysis patients to take oral Vitamin D therapy before trying a more-expensive intravenous version that doctors say is more effective.

Instead, the company merely will recommend that the cheaper oral drugs be tried first.

Earlier this month, First Coast dropped a plan to switch thousands of current dialysis patients from intravenous therapy to the oral drug for at least 90 days before allowing them to be switched back.